Transpacific demand triggers rate boost

Container carriers in the US-Asia markets will ask shippers for USD1,600 in rate and surcharge increases by 1 July, citing strong cargo demand in 2Q15.

The increases, announced by the Transpacific Stabilization Agreement (TSA) on 6 May, include a USD600 per feu rate increase effective 1 June and 1 July, respectively, and a USD400/feu peak season surcharge effective 1 July.

The combined rate and surcharge boost is a significant jump over the rates that carriers sought in 2014 at this time. While carriers asked for a similar peak season surcharge on 15 June, they recommended two USD200/feu rate increases, on 1 July and 15 July.

While last year’s summer rate increases were billed as a means to restore rates that had been stagnant since 2011, carriers this year are looking to counter more recent market rate erosion as well as keep up with stronger demand.

“The entire transportation and logistics sector is still digging out from a very difficult period, and all parties are eager to return to a more stable, predictable environment in moving goods to market,” said TSA executive administrator Brian Conrad.

Conrad also noted that analyst forecasts predicting more than 20% overcapacity on US East Coast services, with corresponding downward pressure on freight rates, may be overstated.

“Our carriers see a very different set of facts on the ground, with perhaps a 15% net capacity increase in a market segment that grew by 10% last year and by an annualized 22% in the first quarter – nearly half of that the result of organic growth, not congestion-related cargo diversion,” Conrad said.